General Motors Corporation (GM)

Legacy car companies still have valuable assets. 
Does not own shares.
Rebound in travel will help business.
Unsure on future of business.
EV deal with Tesla positive. 

EV sales are up 365% YOY, but mostly from the Chevy Bolts. Battery supply chain issues hamper sales of other EVs. Great PE.

Recent deal with Tesla a wise move for long term partnership in electric vehicle industry.
Good long term prospects for the business.
Very high demand for products.

At the time, he considered GM defensive and didn't expect a downturn in autos because inventories were so low at the time. GM has done well this year, beating expecations and trading at 6.5x forward PE. It's dragging its heels and expects growth in the future, namely in EV's. He's sticking with it.

Given ongoing supply chain problems, car inventories on dealer lots in this sector are half the historic average, which gives pricing power to the carmakers. They just beat guidance for the 19th time in 20 quarters. Also, they raised guidance--the consumer is still paying higher prices. Trading at 5x earnings and below book value. Growth is still here.

Auto makers taking hit on shares due to recession fears.
Tesla cutting price on cars wrighing on all companies ability to generate prodits.
If investors take long term view, excellent time to buy. 
5x earnings trading price good opportunity.
Recovery from pandemic will increase sales.
Electric vehicles also presenting opportunity. 

Owns neither. Cheap for a reason, until they're no longer in combustion engines and just compete in EVs with TSLA, which will be hard. 

Big OEM companies are in a very difficult situation. Legacy businesses trying to move to EV. But the combustion business is supporting the EV business. Being tied into dealerships make things difficult too. With TSLA, you order online and then go pick it up, like buying an iPhone.

Combustion side involves so many more parts than EV, so layoffs on the table. More things can go wrong with combustion engines than EV. 

It trades at a low PE, but carries high risk. We're headed for a cyclical downturn in car sales. Car loan rates have jumped from 5.6% to 9% in the past year. Also, few analysts are confident that it can transition easily from gas cars to electric or how to balance the two types. Pure-play Tesla has an edge. Also, the company is heavily unionized. Last year, it suffered supply chain shortages. GM is investing heavily in self-driving cars and ride-hailing, but the street doesn't believe in it, because the future valuation has not budged. Further, GM's market share in China has fallen from 15% to 10%; maybe China's reopening will help. But if the Fed manages a soft landing, this stock will take off.

Let the management do its work, aiming to double revenues by 2030. These are long-term assets. The naysayers are just making a lot of noise. Higher margins than Ford.

Depends on your risk tolerance. He's been looking at GM recently, but hasn't taken any action. Really good recent quarter, will be pressure on financing side of the business. Targets are pretty optimistic. Toyota is a safer bet for the next year or so; it's a giant company with improving profits, uncertainty on EV strategy is not a short-term game-changer. TSLA is his favourite EV play in the auto-making space. TSLA has already won the EV race, especially as to vertical integration.